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We usually see rainbows, when it rains with the sun behind us. Sunlight contains 7 different colors. When sunlight hits a raindrop, each color bends differently, bounces off the inner surface and exits the drop at a different angle.

Now, in a rainbow, the red appears at the top and violet at the bottom because each color exits the droplet at a different angle. High up in the sky, every color except red, exits at an angle above our line of sight. Hence, only red reaches our eyes. Whereas, a few degrees below, every color except violet, exits at an angle below our line of sight. Hence, only violet reaches our eyes. Similarly, colors in between red and violet exit in such a way that below red, we see orange then yellow, green, etc.